2020 (9) TMI 592 - HC - Indian Laws

Dishonor of Cheque - acquittal of the accused - rebuttal of presumption - legally valid debt or not - offence committed under Section 138 of Negotiable Instruments Act - HELD THAT - The petitioner who is the complainant before the trial Court apart from having produced the dishonored cheque (Ex. P1), petitioner bankers memo of dishonor (Ex. P2), respondents-bankers memo of dishonor Ex. P3, legal notice Ex. P4, reply notice Exs. P5 to P8, rejoinder notice Ex. P9 and the complaint in PCR No. 124/2005 (Ex. P10), has not produced any other documents to establish that there is any debt due and liable to be paid. In that Ex. P1 being cheque and Ex. P4 being a demand notice are contended to be sufficient by the petitioner to establish the debt due and liable to be paid by the respondents. The only witness examined being CW. 1 on the part of the petitioner though has stated initially that he is in possession of the invoices and agreement had chosen not to produce those documents and subsequently during further cross-examination has also denied that any invoices were in existence. It is not possible for any transaction of liquor to be done in the absence of invoices more so since liquor is an excisable commodity, under the Central Excise Act, any item of liquor sold would have to be accompanied by invoices, the fact that despite the petitioner having been put on notice as regards production of the invoices even duplicate/Xerox, the petitioner has chosen not to produce them would establish that there is no transaction in respect of this particular amount relatable to liquor as contended by the petitioner - Thus, it cannot be contended that the cheque has been issued in discharge of a legally valid debt by the respondents to the petitioner. There is no legal infirmity in the order passed by the First Appellate Court requiring any interference by this Court - Appeal dismissed - decided against appellant.

Summary

Issues:
1. Whether the complainant needs to prove a legally valid debt to establish an offence under Section 138 of the Negotiable Instruments Act?
2. Whether the accused needs to prove the contrary or mere rebuttal is sufficient in such a proceeding?
3. Whether the judgment of the First Appellate Court has any legal infirmity warranting interference?
4. What is the appropriate order to be passed by the Court?

Analysis:
1. The case involved an appeal against the judgment of the trial court acquitting the accused in a case under Section 138 of the Negotiable Instruments Act. The complainant alleged that the accused issued a dishonored cheque in discharge of a debt. The trial court found the accused guilty, imposing a fine and compensation. The First Appellate Court set aside this order, emphasizing the need for the complainant to prove the existence of a legally enforceable debt. The court held that the mere issuance and dishonor of the cheque do not automatically establish a debt, requiring the complainant to provide evidence of the debt owed by the accused.

2. The accused contended that they had denied any liability towards the petitioner and had issued blank cheques as security, which were misused. They argued that the presumption under Section 139 of the Act was rebuttable, and they had raised doubts about the existence of a debt through legal notices and cross-examination. Citing legal principles from a Supreme Court judgment, the accused emphasized that the burden of proof lay with the complainant and that the standard of proof for rebutting the presumption was preponderance of probabilities. The accused's defense centered on the lack of evidence establishing a valid debt owed to the petitioner.

3. The Court deliberated on the evidence presented, including the dishonored cheque, legal notices, and witness statements. It noted that the petitioner failed to produce documents such as invoices and agreements to substantiate the debt claimed. The Court highlighted inconsistencies in the petitioner's evidence, particularly regarding the existence of invoices related to liquor transactions. Given the lack of concrete evidence supporting the debt claim and the rebuttal by the accused, the Court found no legal infirmity in the First Appellate Court's judgment. Consequently, the Court dismissed the appeal, upholding the decision of the First Appellate Court.

4. The Court concluded that the appeal lacked merit, and there was no basis for interfering with the First Appellate Court's decision. As a result, the appeal was dismissed, and no costs were awarded in the case. The judgment emphasized the importance of establishing a legally valid debt to support a case under Section 138 of the Negotiable Instruments Act and highlighted the significance of providing concrete evidence to substantiate claims in such matters.